Summary
The first Defendant in this case applied to stay the Hong Kong proceedings
relying on a foreign jurisdiction clause allegedly contained in the Bill of
Lading. The court, applying the principles stated in "EL Amria"
to the circumstances of this case, exercised its discretion to refuse the stay.
The application was accordingly dismissed.

DMC Category Rating: Confirmed

This case note is contributed by

Crump
& Co, the International Contributors to the
website for Hong Kong

Background
The Plaintiffs brought a claim in the Hong Kong District Court against both
defendants for damage to a cargo of frozen seafood. The cargo was shipped from
Ningbo, China by the first Plaintiff, to Nagoya, Japan, for delivery to the
second Plaintiff. The cargo was found to be damaged. The first Defendant was the
contractual carrier, the second defendant the actual carrier, China Shipping
Container Lines (Hong Kong).

The first Defendant applied for a stay of the action on the
ground that the bill of lading contained on its reverse a jurisdiction clause in
favour of the Ningbo Maritime Court of the People’s Republic of China.
However, the first Defendant failed to produce the original bill of lading or a
copy of the reverse side of the relevant bill, to prove the existence of this
provision. The second Defendant accepted the jurisdiction of the Hong Kong
court.

It was accepted that there was no close connection between the
Defendants and Hong Kong, apart from their having a business address in Hong
Kong and that, if the case continued in Hong Kong, witnesses would have to be
called from China and Japan. Further relevant considerations were that, under
Clause 4 of the contract of carriage, the applicable law was that of the People’s
Republic of China, and that, under Clause 24 of the Bill of Lading, all suits
had to be brought within nine months after the delivery of the goods. The goods
were delivered on 6 September 2005. The nine months limitation period had thus
expired in June 2006.

Judgment
The Judge took the view that for the court to exercise its discretion to
refuse a stay, the Plaintiffs had to show strong cause. She held that the
Court's discretion in refusing a stay is subject to the principles established
by a line of authorities referred to by Brandon L.J. in the case of The "El
Amria" [1981] 2 Lloyd's Rep. 119, at pp.123-124. The Court has to
consider all of the circumstances of the case, taking into account the following
factors summarised by Dicey and Morris on the Conflict of Laws, 13th
edition, volume 1, page 443 paragraph 12-117:

" In exercising its discretion whether or not to grant a
stay, the court considers al the circumstances of the case, and the following
formulation of the particular factors to be taken into account has been much
relied upon: (1) in which country the evidence is available, and the effect of
that on relative convenience and expense of a trial in England or aboard; (2)
whether the contract is governed by the law of the foreign country in question,
and if so, whether it differs from English law in any material respect (3) with
what country either party is connected, and how closely; (4) whether the
Defendants genuinely desire trial in a foreign county, or are only seeking
procedural advantages (5) whether the Plaintiffs would be deprived of security
for their claim, or be unable to enforce the judgment in their favour, or be
faced wit a time-bar not applicable in England, or for political , racial,
religious or other reasons be unlikely to get a fair trial. The fact that a stay
will result in concurrent proceedings with different parties, but similar
issues, may militate against a stay."

After weighing all the circumstances of the case, the judge
concluded that the Plaintiffs’ position would be prejudiced if the proceedings
were stayed.

At paragraphs 41 and 44 of her judgment, she said:
"Should the present proceedings be stayed for the Plaintiffs to pursue
their claims in the Maritime Court of Ningbo and should the Defendants raise the
issue of limitation of action under the contract in the PRC Court relying on
Clause 24 of the alleged terms and conditions on the back of the said Bill of
Lading, it is likely that the Plaintiffs would not be able to recover against
the Defendants in the PRC. As a result, the Plaintiffs would have to turn
to the Hong Kong Courts and apply for the lifting of the stay of proceedings in
Hong Kong after a long delay and having incurred further expenses in the Ningbo
Maritime Court proceedings. It seems to me to be quite wrong to stay
proceedings in Hong Kong and expose the Plaintiffs to the risks of wasting huge
expenses and time if there is a strong possibility that the matter may be
time-barred in China under the alleged Clause 24 of the said Bill of Lading…Further,
they may have to continue their claims against the second Defendant in any
event, even if they should succeed in the Maritime Court in Ningpo, in order to
enforce the judgment."

The Judge accordingly refused to exercise her discretion to stay
the proceedings.

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